PRODUCT ENDORSMENTS: AGs Want Disclosure Label Deal
In the wake of controversies involving product-endorsement deals between nonprofits and private companies -- such as the deal between the American Medical Association and Sunbeam -- a group of 16 state attorneys general yesterday released proposed guidelines that would require "nonprofit agencies to spell out what the use of a logo means." The Los Angeles Times reports that the preliminary standards would require logo-bestowing companies to clarify whether they were endorsing the product, testing it for efficacy or were being paid in exchange for their seal of approval. Noting that charitable organizations in North America were paid $535 million last year for use of their logos, California Attorney General Bill Lockyer (D) said, "We are looking at standards to protect consumers from false or misleading advertising when a nonprofit group's logo appears next to a commercial product."
The Name Game
The American Heart Association's David Livingston said his group agrees that "adequate disclosure" of these deals is important, but "how that's done could be a point of difference." Nonprofits argue that the business relationships are good for getting their name out and that "most consumers understand how the deals operate," according to the Times. Mike Kamins, business professor for the University of Southern California, "questions whether companies that make consumer goods are going to continue striking deals with nonprofit partners if they're forced to add lengthy disclaimers about their arrangements." Other observers suggest nonprofits shouldn't be selling their logos at all. Harry Snyder of Consumers Union said, "We believe that our name is our most important asset ... we don't authorize anyone to use it and we don't sell it." The proposed guidelines will be discussed by involved parties at a May meeting (Johnson, 4/7).